Climate change represents a growing threat to our water infrastructure. To protect service to customers, investment must be targeted at building resilience, but this must be matched by improved communication between companies and the regulator, says Andrew Heather.

Historically, UK water companies have considered the ability of their water and wastewater systems to withstand the short term impacts of severe weather, and worked on the premise that the weather behaves in a predictable way.

"UK water companies need to develop climate resilience strategies as an integral part of business planning. This means investing in assets for longer term returns that fall outside of most 5-10 year business plans."

However, it is wrong to assume that external factors remain the same. Doing so will create a significant risk to resilience. Rises in global temperature are unleashing acute climate impacts which hit assets, service provision and revenue, as we explained in our recent report Climate Change and Business Survival. With further temperature rise ‘locked in’ due to historic and ongoing greenhouse gas emissions, these climate impacts are set to get worse.

In the UK, the key climate change threats facing the water sector include:

Increased flooding: Population growth and poor urban drainage are already recognised as the cause of more frequent flooding events. But climate change makes the problem much more serious. In 2011 we reported to Ofwat on flood risk in 97 catchment areas and forecast that sewer flooding would increase in them all unless climate resilience is addressed.

Combined hazards: Climate change impacts, together with a growing population and ageing infrastructure puts huge pressure on service delivery. Increasing demand and asset condition are both a key part of business analysis, but many companies fail to take into account how worsening climate impacts can overstress fragile systems.

Cascade failures: Even if water assets are themselves resilient to climate shocks, severe weather events can affect the transport sector or the utilities on which the water sector depends. Full climate resilience means ensuring supply chains and connections to adjacent asset systems are as secure as possible, with plans in place should any part of the system collapse.

UK water companies need to develop climate resilience strategies as an integral part of business planning. This means investing in assets for longer term returns that fall outside of most 5-10 year business plans. And it means making strong, clear justifications for investment to industry regulator Ofwat. Where proposed expenditure is poorly explained, and Ofwat cannot see a clear benefit for customers, investment plans can be rejected and climate resilience will suffer. And in the long run, weak investment plans will be bad for customers.

Water companies and the regulator need to rise to the challenge to ensure climate resilience is given proper consideration.

Companies must take the lead: They need to ensure they have climate resilience strategies in place. Leaders need to develop their planning and presentation skills to give Ofwat the confidence that investment in assets is necessary and in customers’ best interests.

Guidance is needed: Ofwat has to provide a regulatory framework to stimulate and incentivise investment in climate resilience across the industry, with a focus on long term stability over short term cost savings.

Action against inaction: Ofwat must step in where companies fail to deliver on climate resilience.

A shift in the industry’s thinking – towards strengthening assets and investing for the long term – has to be accompanied by a change in the way the water companies and the regulator collaborate.

Andrew Heather is Technical Director at Mott MacDonald.